Debt can be crippling for businesses both large and small but, with the right strategies, it’s often possible to claw your way out of it and set the tone for a more financially healthy future in the long term. Here’s what you can do to manage yours better, presented by BrandyOver40.com
. Analysis Before you begin reducing expenses, it’s important to get a clear view of how and where your business is suffering. To identify any pain points, you’ll have to review your financial statements, liabilities, assets, liquidity, and any expected upcoming costs. If this sounds daunting, don’t worry - you can bring in accountants on a freelance basis to provide analysis and help you to better understand your own spreadsheets. If your monetary constraints don’t allow for the hiring of an expert, it’s also possible to utilize the latest software and attempt to analyze finances yourself. Much of the available accountancy tech is user-friendly and, in addition to simplified data management, provides AI-driven actionable insights or will automate some of the more time-consuming tasks, such as document analysis, on your behalf. Education One way you can learn better business habits is to increase your knowledge. For example, enrolling in a course that introduces you to the basics of marketing can help you cultivate a campaign suited to your business. Or, if you want to handle all the accounting and bookkeeping yourself, you can enroll in accounting programs offered by online universities. Although these do cost money, they’re often cheaper than traditional colleges and provide more flexible schedules. However, ensure you can afford to head in his direction before jumping in; while an education can be an investment in your business, you don’t want to put yourself in more financial debt. Budget Once you have a clear idea of where and how your business is losing money, it’s important to restructure your budget to compensate. This can often mean canceling subscriptions, renegotiating contracts, or even letting go of members of staff because fixed costs are recurrent, they often represent more of your long-term funds than will be apparent on a balance sheet. Identifying and amending these is crucial to the health of your bottom line. When it comes to expenses, some things are intangible. Worker productivity and efficiency, for example, can’t be easily quantified but can directly affect your company’s financial stability. It’s not always easy to improve productivity but you can, at least, try to reduce time wasted on bureaucracy or admin. Again, tech can prove invaluable here. The right payroll program or time management application can reform your work processes. Another way is to form a Limited Liability Company (LLC) - this will provide you with tax advantages and reduce time spent on paperwork. If you’d rather avoid navigating the various state regulations around forming an LLC, you can use a formation service, which may also save you on hefty lawyer fees. Revenue Sometimes, no amount of cost reduction strategies are enough to clear debt - instead, you need to increase revenue. When this is the case, there are plenty of strategies you can use to capitalize on your existing customer base, diversify your product range or even build incentives to increase interactions with your brand. Oftentimes, you’ll need to invest more money into marketing - if this is the case, make sure to spend ample time on research and ensure that you’re using the most cost-efficient methods available. If you’re unsure of how to develop your business in a way that is profitable, it can sometimes be worth hiring a strategy consultant. Sometimes, we’re too close to the problem to recognize a solution - objective opinions can see through the issues and identify a path forward that is most likely to improve your individual circumstances. Although debt can feel crippling it’s important to move boldly even when under financial pressure. If you don’t change something, you’re liable to sink further into debt or be forced to close shop entirely.
Article by Courtney Rosenfeld
